The label was founded with the idea of creating a platform for students in the HNC/D Music Business course, to gain the experience of working first hand with record company operations, while also having a hand in the creation of a thriving music scene within Scotland by releasing local artists. The first release was in 1993 with Baby Chaos, now known as Deckard, and their BuzzEP. Baby Chaos would then go on to receive considerable recognition from their releases with their 1996 album Love Your Self Abuse, being named one of Kerrang!'s 100 Greatest British Rock Albums Ever.[3] The 1995 release of The Moondials, featured Stevie Jackson on guitar, who would go on to join Belle & Sebastian alongside Stuart Murdoch later that year.

Electric Honey's first success came with the release of the label's first album release in 1996, Belle & Sebastian's Tigermilk, named after a track originally written for, but left out from, the album. Formed by Stuart Murdoch and Stuart David, later joined with Stevie Jackson, Belle & Sebastian formed in Glasgow in early 1996, recording their first demos in Stow College. Murdoch was involved early on with the University of Glasgow's Subcity Radio. Originally limited to 1000 copies on Electric Honey, the album was picked up by Jeepster Records who re-released it in 1999, and is now often cited as a classic influential album,[4] with "The State I Am In" being placed at number 17 on Pitchfork Media's top 200 tracks of the 1990s.[5] Belle and Sebastian recently played a special gig at Winfield House- the London residence of the US Ambassador to the United Kingdom.